The price of gold is at a record high. It is out of reach of many of us.
In view of that, many people are turning to silver investing.
Is silver investing a good idea?
In term of the value of commodity, silver investing is a better idea than gold investing.
Silver is used in commercial products. The reason is that silver is the best metal for conducting electricity.
You will see the usage of silver in solar panels, the cell phones and many other products. Even the dentures contain silver.
Some people buy silverware for the sake of investing, and for giving dinner. Silver jewelryis in great demand worldwide.
When commercial world and private investors are competing for the same product, the price is bound to increase.
The fact is that most of the current supply of silver are used in making products. Only a small part of the world’s silver is in the hand of the investors.
Another factor for the increase in silver price is the supply of the commodity, as in the mining process.
The supply of silver does not increase suddenly. Peru is still the largest producer of silver.
However, the demand of silver is increasing.
The price of silver was US$4.15 per Troy ounce in 2001. This month, December 2010, the price of silver reached as high as US$30 per Troy ounce.
How high will the price of silver go? Nobody knows. The price of silver fluctuates wildly.
The price of silver ever reached a high of US$49.45 per Troy ounce due to market manipulation. That was in the year 1980.
Is the current price of silver due to market manipulation? It might be. Since the price of gold is priced out of the reach of common people. Many people are turning to silver investing.
A likely reason for the increased price of silver is the declining dollar. When the value of the dollar goes down, the purchasing power of the currency declines. That is why more dollars
This may be the real reason for the increased price of silver.
Is silver investing a good idea? For the long term, yes. That is when you hold the physical product for a few years.
However, for the short term, when you invest in Exchange Traded Fund, you may see the price fluctuates wildly.
The price may be US$28 per Troy ounce now, and US$20 per Troy ounce the next month. If you use leverage, you may even see a loss in your investing account.
Is it better to hold physical product or paper asset?
The physical product is good only for long term investment. You will find it hard to buy and sell the silver coins or silver bars every week. The cost of shipping and the fluctuating silver price are two barriers.
Paper asset has the advantage of liquidity. You can buy and sell whenever you want. You can treat Exchanged Traded Fund much like buying and selling shares. This method is good for short term holding, and for short term capital gain.
Scheng1 is a passionate blogger from Singapore. Rich in every sense reveals my deep desire in enjoying life, and be rich in every possible ways. Personal Finance is about money, from making money to investing money. Retirement in Asia contains resources on overseas retirement.